Tag Archives: Savings

The Demise Of Bubble Finance And The Folly Of Trump-O-Nomics, by David Stockman

Posted on November 8, 2018 | Leave a comment

Central banks are pulling the rug out from other bubble finance and other Wall Street fun and games. From David Stockman at davidstockmanscontracorner.com via zerohedge.com:

We are at a decisive pivot point and its far more consequential than the mid-term elections. Even then, we cannot but marvel at the utter complacency which still prevails in the casino.

We even heard one bubblevision talking head today suggesting that on the off-chance that the GOP retains the US House of Representatives (the Senate is virtually guaranteed to stay Republican), it will be mighty bullish for stocks. That’s because it would mean more fiscal stimulus, presumably another tax cut of the 10%/$200 billion cost variety that the Donald has been plugging out on the hustings.

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Posted in Business, Debt, Economics, Economy, Financial markets, Government, History, Investing, Money, Taxes

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Savings – Not Tariffs Will Make America Great Again, by Antonius Aquinas

Posted on October 21, 2018 | 1 comment

Savings have gone completely out of style. For those not aware of what savings are: it’s what’s left over when people spend less than they earn. This weird condition only applies to about 2 percent of Americans, so it’s no surprise if you haven’t heard the term. From Antonius Aquinas at antonioaquinas.com:

While the farcical Kavanaugh confirmation hearings dominated the news cycle for the past couple of weeks, little mention was made of a disturbing economic headline – the August US trade deficit. Despite all the bluster from the Trump Administration about “winning trade wars” and “trade wars are easy,” America’s trade imbalances for August were the highest ever and its deficit with its most contentious partner – China – reached an all-time high.

Some highlights or low lights for the Trump Administration and the clueless economic nationalists were:

  • August imports of industrial supplies and materials ($49.7 billion) were the highest since December 2014 ($51.8 billion).
  • August imports of automobile vehicles, parts, and engines ($31.7 billion) were the highest on record.
  • August imports of other goods ($9.1 billion) were the highest on record.
  • August petroleum imports ($20.5 billion) were the highest since December 2014 ($23.6 billion).*

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Posted in Business, Economics, Economy, Foreign Policy, Governments, Trade

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Chung Kuo, by Doug Casey

Posted on February 24, 2018 | Leave a comment

Many Americans have problems with the idea of an ascendant China, especially when it feels like America is descending. From Doug Casey at internationalman.com:

Chung Kuo

This article is entitled Chung Kuo, which means Middle Kingdom.

The Chinese have long seen themselves as superior to every other race (like almost every race does) and the center of the world. It’s because they were so confident of this that they never ventured out as Europeans did, with a brief exception in the 15th century when a gigantic Chinese fleet, composed of ships vastly superior to those of Europe, ventured as far as Africa. Since dropping the ball on world conquest back then, or at least exporting their culture wholesale, they’ve been in stasis, and on the receiving end of what Europe had to dish out.

The Chinese resent the “gweilo,” or “laowai” (loosely translated in Cantonese and Mandarin respectively as “foreign devil”) for appropriating places like Hong Kong, Macau, Shanghai, and numerous other enclaves. They resent episodes like the Opium Wars, which resolved whether they were to be used as a market for narcotics. They never learned to appreciate lots of foreign soldiers running around their countryside, even though Westerners felt it was a birthright.

Rent 55 Days at Peking for the conventional European view of imperialism during the Boxer Rebellion. Better yet, buy or rent The Sand Pebbles, in my opinion one of the best movies out there—and the book is even more entertaining and educational.

The Chinese absolutely resent the U.S. government parading its aircraft carriers off the China coast as if it owned the place. The U.S. government is not showing strength, it’s displaying arrogance and stupidity by antagonizing a sleeping dragon. And the thought of American politicians—which is to say an assortment of insular lawyers, eggheaded wannabe social engineers, and refugees from Arkansas trailer parks—negotiating with people who’ve been through what the Chinese have, is just scary.

The U.S. government may feel like it can call the shots now because it has a dozen aircraft carriers and a couple thousand fighter planes. But it’s making a serious enemy while it’s going to bankrupt America in a counterproductive projection of force to the other side of the planet. And that’s not all. Because the day will go to the people with the most wealth, not the ones that have the most expensive military hardware.

To continue reading: Chung Kuo

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Posted in Business, demographics, Economy, Foreign Policy, Geopolitics, Governments, History, Imperialism, Taxes, Technology, Trade, War

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BlackRock CEO Fink: Negative & Low Interest Rates Eat into Consumer Spending at Worst Possible Time, by Wolf Richter

Posted on April 11, 2016 | Leave a comment

The flip side of those low, low borrowing rates is no, no income from bonds and other savings vehicles. From Wolf Richter at wolfstreet.com:

“A hostile landscape” – that’s what BlackRock CEO Larry Fink called the global investment, economic, and political environment in his gloomy annual letter to his shareholders. It starts out propitiously:

Investors today are facing tremendous uncertainty fueled by slowing economic growth, technological disruption, and social and geopolitical instability.

More specifically:

In China, growth is slowing with global effects.

In the U.S., the quality of corporate earnings is deteriorating, with record share repurchases in 2015 driving valuations – an indication of companies succumbing to the pressures of short-termism in place of constructive, long-term strategies.

And electoral politics muck up the global landscape further:

Polarizing elections in the US and Germany; government transitions in Spain, Taiwan and Canada; allegations of scandal in Brazil, and the UK vote in June on whether to leave the European Union will all continue to drive volatility.

But the impact of low and negative interest rates central banks have imposed on economies around the world is “particularly worrying,” he said. And yet, it’s swept under the rug.

There has been “plenty of discussion” on how low interest rates help trigger asset price inflation, as investors chase yield by loading up on riskier and less liquid asset classes – “with potentially dangerous financial and economic consequences.” But…

Not nearly enough attention has been paid to the toll these low rates – and now negative rates – are taking on the ability of investors to save and plan for the future. People need to invest more today to achieve their desired annual retirement income in the future.

For example, a 35-year-old looking to generate $48,000 per year in retirement income beginning at age 65 would need to invest $178,000 today in a 5% interest rate environment. In a 2% interest rate environment, however, that individual would need to invest $563,000 (or 3.2 times as much) to achieve the same outcome in retirement.

This reality has profound implications for economic growth: consumers saving for retirement need to reduce spending if they are going to reach their retirement income goals; and retirees with lower incomes will need to cut consumption as well. A monetary policy intended to spark growth, then, in fact, risks reducing consumer spending.

Is this why BlackRock is pulling its money out of Japan, where consumer spending, after two decades of ultra-low interest rates, and now negative interest rates, has been weak for just as long – and getting weaker?

To continue reading: BlackRock CEO Fink: Negative & Low Interest Rates Eat into Consumer Spending at Worst Possible Time

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Trump: Economic bubble about to burst, by Kevin Cirilli and Bob Cusack

Posted on October 15, 2015 | Leave a comment

Trump is the first candidate SLL knows of who has expressed any sympathy for savers faced with microscopic interest rates on safe investments. From Kevin Cirilli and Bob Cusack at thehill.com:

NEW YORK — GOP presidential frontrunner Donald Trump warned The Hill in an exclusive interview of a looming economic recession, arguing that the stock market has already entered into another bubble.

He also slammed the 2010 Dodd-Frank Wall Street reform law as a “disaster” that has stifled economic growth.

“It’s terrible,” he said in an interview with The Hill, saying that he would “absolutely” repeal it.

“Under Dodd-Frank, the regulators are running the banks,” Trump said. “The bankers are petrified of the regulators. And the problem is that the banks aren’t loaning money to people who will create jobs.”

Democrats have vehemently defended Dodd-Frank, claiming it strengthened regulators’ ability to go after Wall Street and financial institutions in hopes of preventing an economic collapse. Republicans say it went too far and punished small businesses.

“We have Dodd-Frank and we’re in a bubble right now anyway,” Trump said, alluding to social media companies that he says have initial public offerings worth “billions” but “haven’t even made 10 cents.”

Trump also accused Federal Reserve Chairwoman Janet Yellen of keeping interest rates low in order to shield Obama from having to leave office during a recession.

“She’s keeping the economy going, barely,” Trump said. “The reason they’re keeping the interest rate down is Obama doesn’t want to have a recession-slash-depression during his administration.”

Federal Reserve policymakers are expected in the coming months to raise the interest rate, which has remained at zero percent since the 2008 crisis in an effort to foster economic growth.

“You know who gets hurt the most? People who practice the American dream and did what should have been the right way — the people that went through 40 years of their life and saved a hundred dollars every week [in the bank],” Trump said.

He paused, shaking his head before adding: “They worked all their lives to save and now what happens is they’re being forced into an inflated stock market and at some point they’ll get wiped out.”

http://thehill.com/homenews/campaign/256851-trump-economic-bubble-about-to-burst

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The Central Bankers’ Malodorous War On Savers, by David Stockman

Posted on August 28, 2015 | Leave a comment

From David Stockman at davidstockmanscontracorner.com:

Well, that didn’t take long!

After just three days of market turmoil the monetary politburo swung into action. This time they sent out B-Dud to promise still another monetary sweetener. Said the head of the New York Fed,

“From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago.”.

Needless to say, “B-Dud” is a moniker implying extreme disrespect, and Bill Dudley deserves every bit of it. He is a crony capitalist fool and one of the Fed ring-leaders prosecuting a relentless, savage war on savers. Its only purpose is to keep carry trade speculators gorged with free funding in the money markets and to bloat the profits of Wall Street strip-mining operations, like that of his former employer, Goldman Sachs.

The fact is, any one who doesn’t imbibe in the Keynesian Kool-Aid dispensed by the central banking cartel can see in an instant that 80 months of ZIRP has done exactly nothing for the main street economy. Notwithtanding the Fed’s gussied-up theories about monetary “accommodation” and closing the “output gap” the litmus test is real simple.

To wit, artificial suppression of free market interest rates by the central bank is designed to cause households to borrow more money than they otherwise would in order to spend more than they earn, pure and simple. Its nothing more than a modernized version of the original, crude Keynesian pump-priming theory—–except it dispenses with the inconvenience of getting politicians to approve spending increases and tax cuts in favor of the writ of a small posse of unelected monetary mandarins who run the FOMC and peg money market interest rates at will.

To continue reading: The Central Bankers’ Maodorous War On Savers

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The Real Financial Crisis Ahead——American Households Live Paycheck-To-Paycheck, Saving Virtually Nothing, by Lance Roberts

Posted on April 30, 2015 | Leave a comment

Millions of Americans have not saved enough to have a prayer of retiring. Microscopic interest rates on savings don’t help the situation. From Lance Roberts, at davidstockmanscontracorner.com:

There is a financial crisis on the horizon. It is a crisis that all the Central Bank interventions in the world cannot cure. It is a financial crisis that will continue to change the economic landscape of America for decades to come.

No, I am not talking about the next Lehman event or the next financial market meltdown. Although something akin to both will happen in the not-so-distant future. It is the lack of financial stability of the current, and next, generation that will shape the American landscape in the future.

The nonprofit National Institute on Retirement Security released a study in March stating that nearly 40 million working-age households (about 45 percent of the U.S. total) have no retirement savings at all. And those that do have retirement savings don’t have enough. As I discussed recently, the Federal Reserve’s 2013 Survey of consumer finances found that the mean holdings for families with retirement accounts was only $201,000.

Such levels of financial “savings” are hardly sufficient to support individuals through retirement. This is particularly the case as life expectancy has grown, and healthcare costs skyrocket in the latter stages of life due historically high levels of obesity and poor physical health. The lack of financial stability will ultimately shift almost entirely onto the already grossly underfunded welfare system.

http://davidstockmanscontracorner.com/the-real-financial-crisis-ahead-american-households-live-paycheck-to-paycheck-saving-virtually-nothing/

To continue reading: The Real Financial Crisis Ahead

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